TaxTMI 
TaxTMI 
2025 (3) TMI 2178
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....s) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short 'the Act') for the A.Y. 2018-19. 2. In this case, the case of the Assessee was selected for limited scrutiny on the issue: default in TDS and disallowance for such default. The AO observed from financials that the Assessee has disallowed lower amount u/s 40(a)(ia) of the Act in ITR (part A-OI) in comparison to the audit report, wherein in para no.21(b)(B)(ii) in Form no.3CD the details of the payment of Rs. 1,71,78,470/- though has been mentioned, on which tax is not deducted. The column is titled as "amounts inadmissible u/s 40(a) of the Act, whereas the Assessee failed to disallow 30% of Rs. 1,71,78,470/- in the ITR. The AO consequently, by issuing the stat....
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.... Though the AO considered the explanation of the Assessee, however found the same as not acceptable and therefore the AO made the addition of Rs. 51,53,541/- being 30% of the payments made to the residents and added to the income of the Assessee by observing and holding as under: "During the F.Y. 2017-18 there is non-compliance of the provision of TDS as per section 40(a)(ia) of the Act, by the Assessee. As per Form 3CD the total amount recommended by the auditor for disallowance u/s para 21(b)(B)(ii)(A) is Rs. 1,71,78,470/-. The same has been certified in the audit report for the year under consideration. The Form 26A furnished on 10.10.2019 and 27.08.2020 are not filed electronically filed and as per rule 31ACB of the Rule 1962 (....
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....nder: "22. The AO noticed during the assessment proceeding that out of total interest expenditure of Rs. 78,11,581, the assessee has deducted tax in respect of Rs. 11,07,053 and the balance interest expenditure of Rs. 67,04,528 was paid without deduction of tax at source. The AO asked the assessee to submit Form No 26A to verify whether the payee i.e. M/s Tata Capital Financial Services Limited has taken into account the interest paid by the assessee in computing its total income and whether it has filed the return of income or not. The assessee submitted the Form No 26A [page 178 to 180 of the paper book] as per which M/s Tata Capital Financial Services Limited had taken into account the interest paid by the assessee in computing ....
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.... 30.11.2016 for the AY 2016-17. Thus, the ld. AR argued that there is no merit in the contention of the CIT(A) that the declaration of the assessee has not been submitted. As regards non filing of Form No 26A in electronic form to DGIT (Systems), it was the contention of the ld. AR that the same is only a procedural irregularity and that once the condition of filing of Form No 26A is complied in substance the same should be accepted and not rejected only for the reason that the said form is not electronically filed. 25. The ld. DR supported the order of the lower authorities. A proviso was inserted Section 201 by Finance Act 2012 with effect from 01/07/2012 which reads as under:- "Provided that any person, including the pr....
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....be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purposes section 40(a)(ia) it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee referred to in the said proviso. 28. A combined reading of the above provisions of the Act and the rule, makes it clear that an assessee who is required to deduct tax in accordance with Chapter XVII-B, fails to do so would not be treated as an assessee in default provided the payee has paid tax on the said sum and the assessee has filed the required form in 26A along with a CA certificate. When the assessee is not treated as an assessee in default then no disallowance can ....